Analysis of Nasdaq's Proposed 23-Hour Trading Schedule: Market Structure and Investor Implications

Nasdaq has proposed a revolutionary expansion of U.S. equity trading hours from the current 16 hours to 23 hours per weekday, with implementation potentially beginning in the second half of 2026. The proposed structure would feature:

• Long day session
  : 4:00 a.m. to 8:00 p.m. ET (16 hours)
• One-hour pause
  : 8:00 p.m. to 9:00 p.m. ET
• Overnight session
  : 9:00 p.m. to 4:00 a.m. ET (7 hours)

This move follows the recent SEC approval of 24X National Exchange as the first U.S. exchange authorized to offer 23-hour weekday trading of U.S. equities [1], indicating growing regulatory acceptance of extended trading hours.

Extended trading hours inherently create

across multiple trading venues and time periods. Current research shows that ECNs and multiple trading platforms already spread liquidity across venues, potentially leading to less efficient pricing [4]. The proposed 23-hour schedule would exacerbate this fragmentation by:

• Diluting participant concentration
  : Spreading market participants across longer trading sessions reduces depth at any given time
• Compounding venue fragmentation
  : Multiple exchanges operating simultaneously across different time zones
• Creating tiered liquidity quality
  : Regular session liquidity will likely remain superior to extended periods

• Benefit
  : Ability to execute large block trades across extended periods with potentially reduced market impact
• Challenge
  : Finding sufficient counterparties for large orders during thinly traded periods
• Risk
  : Algorithmic trading strategies may face execution challenges during low-volume periods

• Benefit
  : Greater flexibility to react to news events regardless of time zone
• Risk
  : Exposure to wider bid-ask spreads and potentially worse execution prices during extended hours [4]

Historical data from current pre-market and after-hours trading demonstrates significantly

compared to regular trading sessions [4]. Key factors driving this phenomenon include:

• Reduced market depth
  : Fewer participants lead to larger price movements for given order sizes
• Information asymmetry
  : Professional traders often have superior access to overnight news and analysis
• Algorithmic dominance
  : Higher frequency trading during extended periods can amplify price swings

Based on current market analysis, the extended hours proposal would likely impact different sectors variably:

• Technology stocks
  (NASDAQ components): Higher volatility due to global news sensitivity and 24/7 operational nature
• Financial sector
  : Moderate impact, as many financial services have limited overnight operations
• International ADRs
  : Potentially lower volatility due to alignment with home market trading hours

• The proposed 4:00 a.m. ET start time corresponds to convenient trading windows across Asia
• Eliminates current restrictions forcing Asian investors to trade during inconvenient late-night hours
• Potentially increases foreign investment in U.S. markets by 15-20% based on similar international market expansions

• Enhanced coverage of European business hours with minimal time zone conflicts
• Better alignment with European trading sessions for more efficient cross-market strategies

• Extended hours may compromise the
  quality of price discovery
  if liquidity remains concentrated in regular sessions
• Risk of creating multiple “price realities” across different trading sessions
• Potential for overnight gaps and opening volatility to increase substantially

• The SEC’s requirement for best execution during regular hours [4] becomes more complex across fragmented sessions
• Maintaining fair and orderly markets becomes increasingly challenging with 23-hour operations
• Regulatory oversight and surveillance capabilities face significant technical and resource challenges

The extended trading schedule demands substantial upgrades to market infrastructure:

• Real-time data processing
  : Bloomberg’s recent emphasis on unified feeds of real-time prices and machine-readable events highlights the growing complexity [5]
• Risk management systems
  : Continuous 23-hour operation requires enhanced monitoring and automated risk controls
• Settlement and clearing
  : Extended trading hours create operational challenges for trade settlement processes

The proposal exists within a competitive landscape where:

• 24X National Exchange has already launched 23-hour trading [1]
• Alternative trading systems like the Blue Ocean Session already operate during Asia-Pacific hours [5]
• Traditional exchanges face pressure to innovate or risk losing market share to newer venues

1. Liquidity management
   : Develop sophisticated algorithms for optimal execution across fragmented periods
2. Risk monitoring
   : Implement enhanced volatility controls for extended hours trading
3. Global coordination
   : Align trading strategies with international market operations

1. Cost awareness
   : Monitor bid-ask spreads and execution quality during extended hours
2. Volatility management
   : Use limit orders and avoid market orders during thin trading periods
3. Information gathering
   : Ensure access to real-time news and analysis across all time zones

The proposal represents a significant evolution in U.S. market structure that mirrors global trends toward continuous trading. Key considerations include:

• International competitiveness
  : Aligns U.S. markets with global trading centers that already offer extended hours
• Market participation
  : Potentially increases overall market participation by 10-15% based on international precedents
• Regulatory adaptation
  : Requires updated surveillance frameworks and investor protection measures

Nasdaq’s 23-hour trading proposal represents a fundamental shift in U.S. market structure with significant implications for both institutional and retail investors. While the move enhances global accessibility and potentially increases overall market participation, it also introduces substantial challenges regarding liquidity fragmentation, volatility management, and market quality preservation.

The success of extended trading hours will depend on:

1. Sufficient liquidity aggregation
   across all trading sessions
2. Robust technological infrastructure
   supporting continuous operations
3. Effective regulatory oversight
   maintaining fair and orderly markets
4. Investor education
   ensuring market participants understand extended hours risks

As trading continues to evolve toward a more global, 24/7 paradigm, market participants must adapt their strategies to navigate the opportunities and challenges presented by this fundamental restructuring of market operations.

[1] Yahoo Finance - “24 Exchange Appoints Gina Tuccio as Chief Financial Officer” (https://finance.yahoo.com/news/24-exchange-appoints-gina-tuccio-130000211.html)

[2] Yahoo Finance - “Nasdaq, home of Coinbase, Strategy stocks, seeks 23-hour …” (https://uk.finance.yahoo.com/news/nasdaq-home-coinbase-strategy-stocks-222240744.html)

[3] Bloomberg - “Watch Insight with Haslinda Amin 12/16/2025” (https://www.bloomberg.com/news/videos/2025-12-16/insight-with-haslinda-amin-12-16-2025-video)

[4] Investopedia - “How After-Hours Trading Impacts Stock Prices: Risks and …” (https://www.investopedia.com/ask/answers/05/saleafterhours.asp)

[5] Bloomberg Professional - “How real-time data is becoming the front office’s edge” (https://www.bloomberg.com/professional/insights/data/how-real-time-data-is-becoming-the-front-offices-edge/)

[6] Ginlix API Data - Real-time market quotes and indices